Are Smallcaps Getting Ready To Rumble?
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Posted: Wednesday Mar 12 8:50:42AM 2008
I agree, there are many microcaps still in need of another year or 2 of restructure.
As Tara indicated there are also some screaming buys. Shares are beaten down so much that 5-10 baggers will emerge again for those who pick properly.
Mine is IPX who has been mentioned here and Doren reports on them.
The market they are in is consolidating and smaller companies are getting bought out by larger ones...at much higher valuations to IPX current price.
Also most of the stock is held very tight.
Posted: Tuesday Jan 8 7:19:08AM 2008
I think as always in microcaps, but more so this year you have to be really good at picking your stocks and your sector: in hot sectors even stocks with little promise might see gains. In out of favour sectors even great companies will have a tough time making gains because in a slowing economy micro-caps tend to be avoided because of fear that they will not make it through the tougher times. In neutral sectors ( ie ones that are not hot or out of faovur) one can do well if one finds a company showing really good growth prospects and is well funded and well managed. Not easy being a microcap investor these days.
Posted: Monday Jan 7 10:21:07PM 2008
Anyone else care to share their outlook for 2008?
Posted: Saturday Jan 5 5:47:24PM 2008
I think 2008 will be a very difficult year for the most part in the small-cap markets for a number of reasons:
- high value of Canadian dollar vs. US dollar will hurt those with significant level of US priced exports
- weakening US economy, lower US housing starts, US credit crisis will reduce demand for many exports
- high energy prices will increase costs
- reasonably tight labour market will continue to put pressures on domestic labour costs
- lack of investor confidence usually hurts small-caps to a greater extent as investment community is more likely to turn to what they perceive to be lower risk, less volatile blue chips
- I personally believe that most junior mineral exploration companies are still overvalued - I think stock prices were dramatically ahead of fundamentals not too much unlike the tech bubble, albeit on a smaller scale
- a movement towards tighter credit policies at major financial institutions will make it harder for certain companies to attract growth capital.
That said, I actually feel better about 2008 than I did about 2007. I think there are some real bargains starting to emerge out there, especially among underfollowed industrial/tech deals that perhaps got caught up a bit in tax loss selling etc. I will be accelerating my research over the next few weeks with the intent of playing some short-term (1 week to max. 3 month) rebounds on these sorts of plays. I also feel that there are some interesting opportunities in oil & gas as long as you can find deals with low debt to cash flow ratios and stable / growing production.
My expectations for 2008 are not too high, but I think that there is money to be made for those who do their research. Best of luck to all!